Why our well-being won’t necessarily be improved by opting for GPI instead of GDP

The Council of Outdoor Recreation Associations has welcomed “Prime Minister Jacinda Adrian’s recent announcement that measuring the national’s progress by Gross Domestic Product (GDP) was flawed”.

Let’s overlook the flaw in the council’s spelling of the PM’s name and focus on the implication that Jacinda Ardern was announcing the discovery that GDP has shortcomings as an economic measure.

It depends what you are trying to measure, of course.

The Council of Outdoor Recreation Associations mentions “the growing realisation” that GDP is “narrowly economic in focus and ignored important social and environmental aspects”.

The realisation – awareness would be a better word for it – is several decades old.

Consider this from an economist with the Federal Reserve Bank of Richmond back in the 1990s (and what he was saying about gross domestic product and gross national produce had been recognised long before that).  Continue reading “Why our well-being won’t necessarily be improved by opting for GPI instead of GDP”